Daily Investment Interpretations

January 22, 2010

2010-1-22:  The markets have tumbled for the third day in a row. They've nose-dived more than 5% in three days... something not seen since the October massacre of 2008. The NASDAQ Composite lost 60.41 points, (-2.67%) to close at 2,205.29, the Dow plunged 216.9 points (-2.09%) to close at 10,172.98, and the S&P 500 dove 24.72 points (-2.21%) to 1,091.76. Oil ended the day at $74.54 a barrel. Gold doffed another $11 to end at $1,092. The VIX shot up 5.04 to 27.31.
    The markets are certainly overdue for a 10%-or-greater correction: Correction long overdue (video). However, this is happening with extreme rapidity (as shown in the charts below), although the magnitudes of the daily moves don't match those of the panicky October of 2008. This article: Earnings only part of story, explains that although earnings are rising, revenues aren't  The earnings are coming from cost-cutting, etc., and don't reflect a reviving consumer economy.
    On the other hand, the World Fund announced on Wednesday that the worst of the financial crisis has passed: Where will the next crisis hit?. 
    I'm more than 50% in cash, and I may hedge my remaining long positions by buying a double-inverse index Exchange-Traded Fund on Monday.
    Howard Gold writes: Read Six big predictions for 2010.
    Four other articles that might be of interest are:
    Dust still settling on Street 
    Here come the corporate dollars
    Mark Hulbert: A second look at second years 
    Nouriel Roubini: Don't depend on China